Brandywine Realty Trust (NYSE:BDN) today reported its financial and
operating results for the three and six-month periods ended June
30, 2023.
Management Comments
“We continue to make excellent progress on our 2023 business
plan highlighted by achieving 89% of our speculative revenue target
based on the midpoint of our guidance.” stated Gerard H. Sweeney,
President and Chief Executive Officer for Brandywine Realty Trust.
“Tenants continue to prefer high quality buildings and landlords,
which has benefited our portfolio including positive mark-to-market
increases of 17.6% and 5.8% on an accrual and cash basis. Our
same store portfolio generated positive net operating growth of
6.2% and 6.6% on an accrual and cash basis as well. Our 405
Colorado project is now 100% leased and included in our core
portfolio. Our active development projects continue to
progress as highlighted by the planned opening of our Avira
residential units at 3025 JFK later this quarter. We also
made progress on our 2023 maturities by closing a 5-year mortgage
on our Commerce Square property. Based on our steady progress on
our 2023 business plan we are narrowing our FFO range from $1.12 to
$1.20 per share to $1.14 to $1.18 per share.”
Second Quarter
HighlightsFinancial Results
- Net Loss to
common shareholders: $(12.9) million, or ($0.08) per share.
- Funds from
Operations (FFO): $49.6 million, or $0.29 per diluted share.
Portfolio Results
- Core Portfolio:
89.4% occupied and 91.1% leased. Our Philadelphia CBD and
Pennsylvania Suburb Segments were 95.4% leased and 93.8% occupied
and, on an accrual basis, comprised 74.6% of our YTD NOI.
- New and Renewal
Leases Signed: 568,000 square feet wholly-owned and 969,000 square
feet, including our joint ventures.
- Rental Rate
Mark-to-Market: Increased 17.6% / 5.8% on an accrual / cash
basis
- Same Store Net
Operating Income: increased 6.2% on an accrual basis and increased
6.6% on a cash basis
- Tenant
Retention Ratio: 71%
Recent Transaction Activity
Joint Venture and Development Activity
- On June 2,
2023, we refinanced the mortgage debt for our Commerce Square
Venture, through a new $220.0 million mortgage loan. The new
mortgage bears an all-in fixed interest rate of 7.7875% per annum
and matures in June 2028. In connection with the financing
transaction, the Company contributed $50.5 million to the Commerce
Square Venture in exchange for an additional equity interest and to
fund loan closing costs on behalf of the joint venture. As a result
of our equity contribution, our ownership increased from 70% to
78%.
Disposition Activity
- As of June 30,
2023, the Company was under an agreement to sell an office property
located in Austin, Texas to an unaffiliated third party for $53.3
million. The Company has determined that consummation of the sale
is probable and has classified the property as held for sale on the
consolidated balance sheets. The sale is subject to customary
closing conditions.
2023 Finance / Capital Markets
Activity
- We have no
outstanding balance on our $600.0 million unsecured revolving
credit facility as of June 30, 2023.
- We have $32.1
million of cash and cash equivalents on-hand as of June 30,
2023.
Results for the Three and Six Month
Periods Ended June 30, 2023
Net loss allocated to common shares totaled
($12.9) million or ($0.08) per diluted share in the second quarter
of 2023 compared to a net income of $4.5 million or $0.03 per
diluted share in the second quarter of 2022.
FFO available to common shares and units totaled
$49.6 million or $0.29 per diluted share in the second quarter of
2023 as compared to $60.5 million, or $0.35 per diluted share for
the second quarter of 2022. Our second quarter 2023 payout ratio
($0.19 common share distribution / $0.29 FFO per diluted share) was
65.5%.
Net loss allocated to common shares totaled
($18.2) million or ($0.11) per diluted share in the first six
months of 2023 compared to net income of $10.5 million or $0.06 per
diluted share in the first six months of 2022.
Our FFO available to common shares and units for
the first six months of 2023 totaled $100.4 million or $0.58 per
diluted share versus $120.8 million, or $0.70 per diluted share in
the first six months of 2022. Our payout ratio for the first half
2023 ($0.38 common share distribution / $0.58 FFO per diluted
share) was 65.5%.
Operating and Leasing
Activity
In the second quarter of 2023, our same store
Net Operating Income (NOI) excluding termination revenues and other
income items increased 6.2% on an accrual basis and increased 6.6%
on a cash basis for our 71 same store properties, which were 89.4%
occupied on both June 30, 2023 and 2022.
We leased approximately 568,000 square feet and
commenced occupancy on 207,000 square feet during the second
quarter of 2023. The second quarter occupancy activity includes
114,000 square feet of renewals, 73,000 square feet of new leases
and 20,000 square feet of tenant expansions. We have an additional
224,000 square feet of executed new leasing scheduled to commence
subsequent to June 30, 2023.
Our second quarter tenant retention ratio was
71% in our core portfolio with net absorption of 18,000 square feet
during the second quarter of 2023. Second quarter rental rate
growth increased 17.6% as our renewal rental rates increased 13.0%
and our new lease/expansion rental rates increased 30.1%, all on an
accrual basis.
At June 30, 2023, our core portfolio of 72
properties comprises 12.8 million square feet was 89.4% occupied
and, as of July 19, 2023, we are now 91.1% leased (reflecting new
leases commencing after June 30, 2023).
Distributions
On May 25, 2023, our Board of Trustees declared
a quarterly dividend distribution of $0.19 per common share that
was paid on July 20, 2023 to shareholders of record as of July 6,
2023.
2023 Earnings and FFO
Guidance
Based on current plans and assumptions and
subject to the risks and uncertainties more fully described in our
Securities and Exchange Commission filings, we are narrowing our
2023 loss per share guidance from ($0.15) - ($0.07) per share to
($0.16) - ($0.12) per share due to projected higher depreciation
and amortization expense and we are narrowing our 2023 FFO guidance
from $1.12 - $1.20 per diluted share to $1.14 - $1.18 per diluted
share. This guidance is provided for informational purposes and is
subject to change. The following is a reconciliation of the
calculation of 2023 FFO and earnings per diluted share:
| Guidance for
2023 |
|
Range |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share allocated to common shareholders |
|
($0.16 |
) |
to |
($0.12 |
) |
|
| |
Plus: real estate
depreciation, amortization |
|
1.30 |
|
|
1.30 |
|
|
| |
FFO per diluted share |
|
$1.14 |
|
to |
$1.18 |
|
|
| |
|
|
|
|
|
|
|
|
Our 2023 FFO key assumptions remain unchanged
from the previous quarter and include:
- Year-end Core
Occupancy Range: 90-91%;
- Year-end Core
Leased Range: 91-92%;
- Rental Rate
Growth (accrual): 11-13%;
- Rental Rate
Growth (cash): 4-6%;
- Same Store
(accrual) NOI Growth Range: 0-2%;
- Same Store
(cash) NOI Growth Range: 2.5-4.5%;
- Speculative
Revenue Target: $17.0 - $19.0 million, $16.1 million achieved;
- Tenant
Retention Rate Range: 49-51%;
- Property
Acquisition Activity: None;
- Property Sales
Activity: $100 - $125 million; $53.3 million sale currently under
agreement
- Joint Venture
Activity: Our ownership interest in our Commerce Square joint
venture increased from 70% to 78%;
- Development
Starts: None;
- Financing
Activity: $245 Million Secured Financing (complete); $70.0 Million
2-Year Unsecured Term Loan (complete); $220.0 million secured
financing for Commerce Square (complete) and Construction Loan at
155 King of Prussia Rd in Radnor, PA (in process);
- Share Buyback
Activity: None;
- Annual
earnings and FFO per diluted share based on 174.0 million fully
diluted weighted average common shares.
About Brandywine Realty
Trust
Brandywine Realty Trust (NYSE: BDN) is one of
the largest, publicly traded, full-service, integrated real estate
companies in the United States with a core focus in the
Philadelphia and Austin markets. Organized as a real estate
investment trust (REIT), we own, develop, lease and manage an
urban, town center and transit-oriented portfolio comprising 162
properties and 22.8 million square feet as of June 30, 2023 which
excludes assets held for sale. Our purpose is to shape, connect and
inspire the world around us through our expertise, the
relationships we foster, the communities in which we live and work,
and the history we build together. For more information, please
visit www.brandywinerealty.com.
Conference Call and Audio
Webcast
We will release our second quarter earnings after the market
close on Tuesday July 25, 2023 and will hold our second quarter
conference call on Wednesday July 26, 2023 at 9:00 a.m. Eastern
Time. To access the conference call by phone, please visit this
link here, and you will be provided with dial in details. A
live webcast of the conference call will also be available on the
Investor Relations page of our website at
www.brandywinerealty.com.
Looking Ahead – Third Quarter 2023
Conference Call
We expect to release our third quarter 2023
earnings on Tuesday, October 24 2023 after the market close and
will host our third quarter 2023 conference call on Wednesday
October 25, 2023 at 9:00 a.m. Eastern. We expect to issue a press
release in advance of these events to reconfirm the dates and times
and provide all related information.
Forward-Looking Statements
This press release contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking
statements can generally be identified by our use of
forward-looking terminology such as “will,” “strategy,” “expects,”
“seeks,” “believes,” “potential,” or other similar words. Because
such statements involve known and unknown risks, uncertainties and
contingencies, actual results may differ materially from the
expectations, intentions, beliefs, plans or predictions of the
future expressed or implied by such forward-looking statements.
These forward-looking statements, including our 2023 guidance and
the progress of our projects under development, are based upon the
current beliefs and expectations of our management and are
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
difficult to predict and not within our control. Such risks,
uncertainties and contingencies include, among others: risks
related to the impact of COVID-19 and other potential future
outbreaks of infectious diseases on our financial condition,
results of operations and cash flows and those of our tenants as
well as on the economy and real estate and financial markets;
reduced demand for office space and pricing pressures, including
from competitors, that could limit our ability to lease space or
set rents at expected levels or that could lead to declines in
rent; uncertainty and volatility in capital and credit markets,
including changes that reduce availability, and increase costs, of
capital or that delay receipt of our planned debt financings and
refinancings; the effect of inflation and interest rate
fluctuations, including on the costs of our planned debt financings
and refinancings; the potential loss or bankruptcy of tenants or
the inability of tenants to meet their rent and other lease
obligations; risks of acquisitions and dispositions, including
unexpected liabilities and integration costs; delays in completing,
and cost overruns incurred in connection with, our developments and
redevelopments; disagreements with joint venture partners;
unanticipated operating and capital costs; uninsured casualty
losses and our ability to obtain adequate insurance, including
coverage for terrorist acts; asset impairments; our dependence upon
certain geographic markets; changes in governmental regulations,
tax laws and rates and similar matters; unexpected costs of REIT
qualification compliance; and costs and disruptions as the result
of a cybersecurity incident or other technology disruption. The
declaration and payment of future dividends (both timing and
amount) is subject to the determination of our Board of Trustees,
in its sole discretion, after considering various factors,
including our financial condition, historical and forecast
operating results, and available cash flow, as well as any
applicable laws and contractual covenants and any other relevant
factors. Our Board’s practice regarding declaration of dividends
may be modified at any time and from time to time. Additional
information on factors which could impact us and the
forward-looking statements contained herein are included in our
filings with the Securities and Exchange Commission, including our
Form 10-K for the year ended December 31, 2022. We assume no
obligation to update or supplement forward-looking statements that
become untrue because of subsequent events except as required by
law.
Non-GAAP Supplemental Financial
Measures
We compute our financial results in accordance
with generally accepted accounting principles (GAAP). Although FFO
and NOI are non-GAAP financial measures, we believe that FFO and
NOI calculations are helpful to shareholders and potential
investors and are widely recognized measures of real estate
investment trust performance. At the end of this press release, we
have provided a reconciliation of the non-GAAP financial measures
to the most directly comparable GAAP measure.
Funds from Operations (FFO)
We compute FFO in accordance with standards
established by the National Association of Real Estate Investment
Trusts (NAREIT), which may not be comparable to FFO reported by
other REITs that do not compute FFO in accordance with the NAREIT
definition, or that interpret the NAREIT definition differently
than us. NAREIT defines FFO as net income (loss) before
non-controlling interests and excluding gains (losses) on sales of
depreciable operating property, impairment losses on depreciable
consolidated real estate, impairment losses on investments in
unconsolidated real estate ventures and extraordinary items
(computed in accordance with GAAP); plus real estate related
depreciation and amortization (excluding amortization of deferred
financing costs), and after similar adjustments for unconsolidated
joint ventures. Net income, the GAAP measure that we believe to be
most directly comparable to FFO, includes depreciation and
amortization expenses, gains or losses on property sales,
extraordinary items and non-controlling interests. To facilitate a
clear understanding of our historical operating results, FFO should
be examined in conjunction with net income (determined in
accordance with GAAP) as presented in the financial statements
included elsewhere in this release. FFO does not represent cash
flow from operating activities (determined in accordance with GAAP)
and should not be considered to be an alternative to net income
(loss) (determined in accordance with GAAP) as an indication of our
financial performance or to be an alternative to cash flow from
operating activities (determined in accordance with GAAP) as a
measure of our liquidity, nor is it indicative of funds available
for our cash needs, including our ability to make cash
distributions to shareholders. We generally consider FFO and FFO
per share to be useful measures for understanding and comparing our
operating results because, by excluding gains and losses related to
sales of previously depreciated operating real estate assets,
impairment losses and real estate asset depreciation and
amortization (which can differ across owners of similar assets in
similar condition based on historical cost accounting and useful
life estimates), FFO and FFO per share can help investors compare
the operating performance of a company’s real estate across
reporting periods and to the operating performance of other
companies.
Net Operating Income (NOI)
NOI (accrual basis) is a financial measure equal
to net income available to common shareholders, the most directly
comparable GAAP financial measure, plus corporate general and
administrative expense, depreciation and amortization, interest
expense, non-controlling interest in the Operating Partnership and
losses from early extinguishment of debt, less interest income,
development and management income, gains from property
dispositions, gains on sale from discontinued operations, gains on
early extinguishment of debt, income from discontinued operations,
income from unconsolidated joint ventures and non-controlling
interest in property partnerships. In some cases we also present
NOI on a cash basis, which is NOI after eliminating the effects of
straight-lining of rent and deferred market intangible
amortization. NOI presented by us may not be comparable to NOI
reported by other REITs that define NOI differently. NOI should not
be considered an alternative to net income as an indication of our
performance or to cash flows as a measure of the Company's
liquidity or its ability to make distributions. We believe NOI is a
useful measure for evaluating the operating performance of our
properties, as it excludes certain components from net income
available to common shareholders in order to provide results that
are more closely related to a property's results of operations. We
use NOI internally to evaluate the performance of our operating
segments and to make decisions about resource allocations. We
concluded that NOI provides useful information to investors
regarding our financial condition and results of operations, as it
reflects only the income and expense items incurred at the property
level, as well as the impact on operations from trends in occupancy
rates, rental rates, operating costs and acquisition and
development activity on an unlevered basis.
Same Store Properties
In our analysis of NOI, particularly to make
comparisons of NOI between periods meaningful, it is important to
provide information for properties that were in-service and owned
by us throughout each period presented. We refer to properties
acquired or placed in-service prior to the beginning of the
earliest period presented and owned by us through the end of the
latest period presented as Same Store Properties. Same Store
Properties therefore exclude properties placed in-service,
acquired, repositioned, held for sale or in development or
redevelopment after the beginning of the earliest period presented
or disposed of prior to the end of the latest period presented.
Accordingly, it takes at least one year and one quarter after a
property is acquired for that property to be included in Same Store
Properties.
Core Portfolio
Our core portfolio is comprised of our
wholly-owned properties, excluding any properties currently in
development, re-development or re-entitlement.
| |
|
BRANDYWINE REALTY TRUSTCONSOLIDATED
BALANCE SHEETS(unaudited, in thousands, except
share and per share data) |
| |
| |
|
June 30, 2023 |
|
December 31, 2022 |
| ASSETS |
|
|
|
|
|
Real estate investments: |
|
|
|
|
|
Operating properties |
|
$ |
3,597,211 |
|
|
$ |
3,617,240 |
|
|
Accumulated depreciation |
|
|
(1,125,145 |
) |
|
|
(1,063,060 |
) |
|
Right of use asset - operating leases, net |
|
|
19,346 |
|
|
|
19,664 |
|
|
Operating real estate investments, net |
|
|
2,491,412 |
|
|
|
2,573,844 |
|
|
Construction-in-progress |
|
|
245,677 |
|
|
|
218,869 |
|
|
Land held for development |
|
|
71,493 |
|
|
|
76,499 |
|
|
Prepaid leasehold interests in land held for development, net |
|
|
27,762 |
|
|
|
35,576 |
|
|
Total real estate investments, net |
|
|
2,836,344 |
|
|
|
2,904,788 |
|
|
Assets held for sale, net |
|
|
52,664 |
|
|
|
— |
|
|
Cash and cash equivalents |
|
|
32,111 |
|
|
|
17,551 |
|
|
Restricted cash and escrow |
|
|
10,876 |
|
|
|
— |
|
|
Accounts receivable |
|
|
11,654 |
|
|
|
11,003 |
|
|
Accrued rent receivable, net of allowance of $3,778 and $3,947 as
of June 30, 2023 and December 31, 2022, respectively |
|
|
183,191 |
|
|
|
179,771 |
|
|
Investment in unconsolidated real estate ventures |
|
|
630,505 |
|
|
|
567,635 |
|
|
Deferred costs, net |
|
|
95,102 |
|
|
|
96,639 |
|
|
Intangible assets, net |
|
|
11,676 |
|
|
|
18,451 |
|
|
Other assets |
|
|
90,362 |
|
|
|
78,667 |
|
|
Total assets |
|
$ |
3,954,485 |
|
|
$ |
3,874,505 |
|
| LIABILITIES AND
BENEFICIARIES' EQUITY |
|
|
|
|
|
Secured term loan, net |
|
$ |
241,383 |
|
|
$ |
— |
|
|
Unsecured credit facility |
|
|
— |
|
|
|
88,500 |
|
|
Unsecured term loan, net |
|
|
318,065 |
|
|
|
248,168 |
|
|
Unsecured senior notes, net |
|
|
1,574,373 |
|
|
|
1,628,370 |
|
|
Accounts payable and accrued expenses |
|
|
116,913 |
|
|
|
132,440 |
|
|
Distributions payable |
|
|
32,957 |
|
|
|
32,792 |
|
|
Deferred income, gains and rent |
|
|
24,786 |
|
|
|
25,082 |
|
|
Intangible liabilities, net |
|
|
8,811 |
|
|
|
10,322 |
|
|
Liabilities related to assets held for sale |
|
|
1,041 |
|
|
|
— |
|
|
Lease liability - operating leases |
|
|
23,268 |
|
|
|
23,166 |
|
|
Other liabilities |
|
|
56,228 |
|
|
|
52,331 |
|
|
Total liabilities |
|
$ |
2,397,825 |
|
|
$ |
2,241,171 |
|
|
Brandywine Realty Trust's Equity: |
|
|
|
|
|
Common Shares of Brandywine Realty Trust's beneficial interest,
$0.01 par value; shares authorized 400,000,000; 172,101,929 and
171,569,807 issued and outstanding as of June 30, 2023 and
December 31, 2022, respectively |
|
|
1,719 |
|
|
|
1,716 |
|
|
Additional paid-in-capital |
|
|
3,159,276 |
|
|
|
3,153,229 |
|
|
Deferred compensation payable in common shares |
|
|
19,965 |
|
|
|
19,601 |
|
|
Common shares in grantor trust, 1,207,415 and 1,179,643 issued and
outstanding as of June 30, 2023 and December 31, 2022,
respectively |
|
|
(19,965 |
) |
|
|
(19,601 |
) |
|
Cumulative earnings |
|
|
1,158,240 |
|
|
|
1,176,195 |
|
|
Accumulated other comprehensive income |
|
|
5,216 |
|
|
|
3,897 |
|
|
Cumulative distributions |
|
|
(2,775,124 |
) |
|
|
(2,709,405 |
) |
|
Total Brandywine Realty Trust's equity |
|
|
1,549,327 |
|
|
|
1,625,632 |
|
|
Noncontrolling interests |
|
|
7,333 |
|
|
|
7,702 |
|
|
Total beneficiaries' equity |
|
$ |
1,556,660 |
|
|
$ |
1,633,334 |
|
|
Total liabilities and beneficiaries' equity |
|
$ |
3,954,485 |
|
|
$ |
3,874,505 |
|
| |
|
BRANDYWINE REALTY TRUSTCONSOLIDATED
STATEMENTS OF OPERATIONS(unaudited, in thousands,
except share and per share data) |
| |
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Revenue |
|
|
|
|
|
|
|
|
Rents |
$ |
118,133 |
|
|
$ |
116,897 |
|
|
$ |
238,981 |
|
|
$ |
232,798 |
|
|
Third party management fees, labor reimbursement and leasing |
|
6,227 |
|
|
|
5,924 |
|
|
|
12,229 |
|
|
|
11,032 |
|
|
Other |
|
1,522 |
|
|
|
1,221 |
|
|
|
3,899 |
|
|
|
7,717 |
|
|
Total revenue |
|
125,882 |
|
|
|
124,042 |
|
|
|
255,109 |
|
|
|
251,547 |
|
| Operating
expenses |
|
|
|
|
|
|
|
|
Property operating expenses |
|
31,891 |
|
|
|
33,111 |
|
|
|
65,485 |
|
|
|
64,659 |
|
|
Real estate taxes |
|
11,571 |
|
|
|
13,746 |
|
|
|
26,173 |
|
|
|
27,559 |
|
|
Third party management expenses |
|
2,557 |
|
|
|
2,792 |
|
|
|
5,196 |
|
|
|
5,349 |
|
|
Depreciation and amortization |
|
47,079 |
|
|
|
43,959 |
|
|
|
92,679 |
|
|
|
87,741 |
|
|
General and administrative expenses |
|
9,360 |
|
|
|
8,328 |
|
|
|
18,842 |
|
|
|
18,328 |
|
|
Provision for impairment |
|
4,468 |
|
|
|
— |
|
|
|
4,468 |
|
|
|
— |
|
|
Total operating expenses |
|
106,926 |
|
|
|
101,936 |
|
|
|
212,843 |
|
|
|
203,636 |
|
| Gain on sale of real
estate |
|
|
|
|
|
|
|
|
Net gain on disposition of real estate |
|
— |
|
|
|
144 |
|
|
|
— |
|
|
|
144 |
|
|
Net gain on sale of undepreciated real estate |
|
— |
|
|
|
4,127 |
|
|
|
781 |
|
|
|
5,024 |
|
|
Total gain on sale of real estate |
|
— |
|
|
|
4,271 |
|
|
|
781 |
|
|
|
5,168 |
|
| Operating
income |
|
18,956 |
|
|
|
26,377 |
|
|
|
43,047 |
|
|
|
53,079 |
|
| Other income
(expense): |
|
|
|
|
|
|
|
|
Interest and investment income |
|
520 |
|
|
|
449 |
|
|
|
1,025 |
|
|
|
889 |
|
|
Interest expense |
|
(23,669 |
) |
|
|
(16,341 |
) |
|
|
(46,322 |
) |
|
|
(32,083 |
) |
|
Interest expense - amortization of deferred financing costs |
|
(1,114 |
) |
|
|
(805 |
) |
|
|
(2,141 |
) |
|
|
(1,514 |
) |
| Equity in income of
unconsolidated real estate ventures |
|
(7,598 |
) |
|
|
(4,981 |
) |
|
|
(13,765 |
) |
|
|
(9,544 |
) |
|
Net gain on real estate venture transactions |
|
181 |
|
|
|
— |
|
|
|
181 |
|
|
|
— |
|
| Net income (loss)
before income taxes |
|
(12,724 |
) |
|
|
4,699 |
|
|
|
(17,975 |
) |
|
|
10,827 |
|
|
Income tax (provision) benefit |
|
(13 |
) |
|
|
(48 |
) |
|
|
(38 |
) |
|
|
(75 |
) |
| Net income
(loss) |
|
(12,737 |
) |
|
|
4,651 |
|
|
|
(18,013 |
) |
|
|
10,752 |
|
| Net income attributable to
noncontrolling interests |
|
41 |
|
|
|
(14 |
) |
|
|
58 |
|
|
|
(22 |
) |
| Net income (loss)
attributable to Brandywine Realty Trust |
|
(12,696 |
) |
|
|
4,637 |
|
|
|
(17,955 |
) |
|
|
10,730 |
|
| Nonforfeitable dividends
allocated to unvested restricted shareholders |
|
(204 |
) |
|
|
(98 |
) |
|
|
(274 |
) |
|
|
(246 |
) |
| Net income (loss)
attributable to Common Shareholders of Brandywine Realty
Trust |
$ |
(12,900 |
) |
|
$ |
4,539 |
|
|
$ |
(18,229 |
) |
|
$ |
10,484 |
|
| PER SHARE
DATA |
|
|
|
|
|
|
|
| Basic income (loss) per Common
Share |
$ |
(0.08 |
) |
|
$ |
0.03 |
|
|
$ |
(0.11 |
) |
|
$ |
0.06 |
|
| Basic weighted average shares
outstanding |
|
171,962,162 |
|
|
|
171,527,031 |
|
|
|
171,818,463 |
|
|
|
171,411,631 |
|
| Diluted income (loss) per
Common Share |
$ |
(0.08 |
) |
|
$ |
0.03 |
|
|
$ |
(0.11 |
) |
|
$ |
0.06 |
|
| Diluted weighted average
shares outstanding |
|
171,962,162 |
|
|
|
172,260,429 |
|
|
|
171,818,463 |
|
|
|
172,575,408 |
|
| |
|
BRANDYWINE REALTY TRUSTFUNDS FROM
OPERATIONS(unaudited, in thousands, except share
and per share data) |
| |
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Net income (loss)
attributable to common shareholders |
$ |
(12,900 |
) |
|
$ |
4,539 |
|
|
$ |
(18,229 |
) |
|
$ |
10,484 |
|
| Add (deduct): |
|
|
|
|
|
|
|
|
Net income (loss) attributable to noncontrolling interests - LP
units |
|
(41 |
) |
|
|
16 |
|
|
|
(57 |
) |
|
|
26 |
|
|
Nonforfeitable dividends allocated to unvested restricted
shareholders |
|
204 |
|
|
|
98 |
|
|
|
274 |
|
|
|
246 |
|
|
Net gain on real estate venture transactions |
|
(181 |
) |
|
|
— |
|
|
|
(181 |
) |
|
|
— |
|
|
Net gain on disposition of real estate |
|
— |
|
|
|
(144 |
) |
|
|
— |
|
|
|
(144 |
) |
|
Provision for impairment |
|
4,468 |
|
|
|
— |
|
|
|
4,468 |
|
|
|
— |
|
|
Depreciation and amortization: |
|
|
|
|
|
|
|
|
Real property |
|
39,119 |
|
|
|
36,631 |
|
|
|
77,749 |
|
|
|
72,793 |
|
|
Leasing costs including acquired intangibles |
|
7,103 |
|
|
|
6,597 |
|
|
|
13,243 |
|
|
|
13,591 |
|
|
Company’s share of unconsolidated real estate ventures |
|
12,145 |
|
|
|
12,903 |
|
|
|
23,709 |
|
|
|
24,198 |
|
|
Partners’ share of consolidated real estate ventures |
|
(4 |
) |
|
|
(5 |
) |
|
|
(8 |
) |
|
|
(10 |
) |
| Funds from operations |
$ |
49,913 |
|
|
$ |
60,635 |
|
|
$ |
100,968 |
|
|
$ |
121,184 |
|
|
Funds from operations allocable to unvested restricted
shareholders |
|
(309 |
) |
|
|
(154 |
) |
|
|
(533 |
) |
|
|
(392 |
) |
| Funds from operations
available to common share and unit holders (FFO) |
$ |
49,604 |
|
|
$ |
60,481 |
|
|
$ |
100,435 |
|
|
$ |
120,792 |
|
| FFO per share - fully
diluted |
$ |
0.29 |
|
|
$ |
0.35 |
|
|
$ |
0.58 |
|
|
$ |
0.70 |
|
| Weighted-average shares/units
outstanding — fully diluted (a) |
|
172,797,873 |
|
|
|
172,776,896 |
|
|
|
172,811,483 |
|
|
|
173,149,640 |
|
| Distributions paid per common
share |
$ |
0.19 |
|
|
$ |
0.19 |
|
|
$ |
0.38 |
|
|
$ |
0.38 |
|
| FFO payout ratio
(distributions paid per common share/FFO per diluted share) |
|
66 |
% |
|
|
54 |
% |
|
|
66 |
% |
|
|
54 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BRANDYWINE REALTY
TRUSTSAME STORE OPERATIONS –
2nd QUARTER(unaudited and
in thousands)
Of the 76 properties owned by the Company as of
June 30, 2023, a total of 71 properties ("Same Store
Properties") containing an aggregate of 12,618 million net rentable
square feet were owned for the entire three months ended June 30,
2023 and 2022. As of June 30, 2023, 1 property was recently
completed, and 4 properties were in development/redevelopment.
Average occupancy for the Same Store Properties was 89.4% and 89.4%
during the three-month periods ended June 30, 2023 and 2022,
respectively. The following table sets forth revenue and expense
information for the Same Store Properties:
| |
|
Three Months Ended June 30, |
|
|
|
|
2023 |
|
|
|
2022 |
|
| Revenue |
|
|
|
|
|
Rents |
|
$ |
108,193 |
|
|
$ |
108,008 |
|
|
Other |
|
|
251 |
|
|
|
264 |
|
|
Total revenue |
|
|
108,444 |
|
|
|
108,272 |
|
| Operating
expenses |
|
|
|
|
|
Property operating expenses |
|
|
28,077 |
|
|
|
28,749 |
|
|
Real estate taxes |
|
|
10,372 |
|
|
|
12,632 |
|
|
Net operating income |
|
$ |
69,995 |
|
|
$ |
66,891 |
|
|
Net operating income - percentage change over prior
year |
|
|
4.6 |
% |
|
|
|
Net operating income, excluding other items |
|
$ |
69,866 |
|
|
$ |
65,817 |
|
|
Net operating income, excluding other items - percentage
change over prior year |
|
|
6.2 |
% |
|
|
| Net operating
income |
|
$ |
69,995 |
|
|
$ |
66,891 |
|
|
Straight line rents & other |
|
|
(1,238 |
) |
|
|
(1,616 |
) |
|
Above/below market rent amortization |
|
|
(285 |
) |
|
|
(307 |
) |
|
Amortization of tenant inducements |
|
|
171 |
|
|
|
164 |
|
|
Non-cash ground rent expense |
|
|
197 |
|
|
|
201 |
|
|
Cash - Net operating income |
|
$ |
68,840 |
|
|
$ |
65,333 |
|
|
Cash - Net operating income - percentage change over prior
year |
|
|
5.4 |
% |
|
|
|
Cash - Net operating income, excluding other
items |
|
$ |
67,975 |
|
|
$ |
63,748 |
|
|
Cash - Net operating income, excluding other items -
percentage change over prior year |
|
|
6.6 |
% |
|
|
| |
|
Three Months Ended June 30, |
| |
|
|
2023 |
|
|
|
2022 |
|
| Net income (loss): |
|
$ |
(12,737 |
) |
|
$ |
4,651 |
|
| Add/(deduct): |
|
|
|
|
|
Interest income |
|
|
(520 |
) |
|
|
(449 |
) |
|
Interest expense |
|
|
23,669 |
|
|
|
16,341 |
|
|
Interest expense - amortization of deferred financing costs |
|
|
1,114 |
|
|
|
805 |
|
|
Equity in loss of unconsolidated real estate ventures |
|
|
7,598 |
|
|
|
4,981 |
|
|
Net gain on real estate venture transactions |
|
|
(181 |
) |
|
|
— |
|
|
Net gain on disposition of real estate |
|
|
— |
|
|
|
(144 |
) |
|
Net gain on sale of undepreciated real estate |
|
|
— |
|
|
|
(4,127 |
) |
|
Depreciation and amortization |
|
|
47,079 |
|
|
|
43,959 |
|
|
General & administrative expenses |
|
|
9,360 |
|
|
|
8,328 |
|
|
Income tax provision (benefit) |
|
|
13 |
|
|
|
48 |
|
|
Provision for impairment |
|
|
4,468 |
|
|
|
— |
|
|
Consolidated net operating income |
|
|
79,863 |
|
|
|
74,393 |
|
| Less: Net operating income of
non-same store properties and elimination of non-property specific
operations |
|
|
(9,868 |
) |
|
|
(7,502 |
) |
|
Same store net operating income |
|
$ |
69,995 |
|
|
$ |
66,891 |
|
| |
|
|
|
|
BRANDYWINE REALTY
TRUSTSAME STORE OPERATIONS – SIX
MONTHS(unaudited and in
thousands)
Of the 76 properties owned by the Company as of June 30,
2023, a total of 71 properties ("Same Store Properties") containing
an aggregate of 12,618 million net rentable square feet were owned
for the entire six months ended June 30, 2023 and 2022. As of
June 30, 2023, 1 property was recently completed, and 4
properties were in development/redevelopment. Average occupancy for
the Same Store Properties was 89.4% and 88.7% during the six-month
periods ended June 30, 2023 and 2022, respectively. The
following table sets forth revenue and expense information for the
Same Store Properties:
| |
|
Six Months Ended June 30, |
|
|
|
|
2023 |
|
|
|
2022 |
|
| Revenue |
|
|
|
|
|
Rents |
|
$ |
220,313 |
|
|
$ |
216,350 |
|
|
Other |
|
|
534 |
|
|
|
568 |
|
|
Total revenue |
|
|
220,847 |
|
|
|
216,918 |
|
| Operating
expenses |
|
|
|
|
|
Property operating expenses |
|
|
58,382 |
|
|
|
56,949 |
|
|
Real estate taxes |
|
|
23,395 |
|
|
|
25,298 |
|
|
Net operating income |
|
$ |
139,070 |
|
|
$ |
134,671 |
|
|
Net operating income - percentage change over prior
year |
|
|
3.3 |
% |
|
|
|
Net operating income, excluding other items |
|
$ |
138,868 |
|
|
$ |
132,834 |
|
|
Net operating income, excluding other items - percentage
change over prior year |
|
|
4.5 |
% |
|
|
| Net operating
income |
|
$ |
139,070 |
|
|
$ |
134,671 |
|
|
Straight line rents & other |
|
|
(3,582 |
) |
|
|
(4,542 |
) |
|
Above/below market rent amortization |
|
|
(571 |
) |
|
|
(696 |
) |
|
Amortization of tenant inducements |
|
|
336 |
|
|
|
336 |
|
|
Non-cash ground rent expense |
|
|
397 |
|
|
|
405 |
|
|
Cash - Net operating income |
|
$ |
135,650 |
|
|
$ |
130,174 |
|
|
Cash - Net operating income - percentage change over prior
year |
|
|
4.2 |
% |
|
|
|
Cash - Net operating income, excluding other
items |
|
$ |
134,086 |
|
|
$ |
127,137 |
|
|
Cash - Net operating income, excluding other items -
percentage change over prior year |
|
|
5.5 |
% |
|
|
| |
|
Six Months Ended June 30, |
| |
|
|
2023 |
|
|
|
2022 |
|
| Net income: |
|
$ |
(18,013 |
) |
|
$ |
10,752 |
|
| Add/(deduct): |
|
|
|
|
|
Interest income |
|
|
(1,025 |
) |
|
|
(889 |
) |
|
Interest expense |
|
|
46,322 |
|
|
|
32,083 |
|
|
Interest expense - amortization of deferred financing costs |
|
|
2,141 |
|
|
|
1,514 |
|
|
Equity in loss of unconsolidated real estate ventures |
|
|
13,765 |
|
|
|
9,544 |
|
|
Net gain on real estate venture transactions |
|
|
(181 |
) |
|
|
— |
|
|
Net gain on disposition of real estate |
|
|
— |
|
|
|
(144 |
) |
|
Net gain on sale of undepreciated real estate |
|
|
(781 |
) |
|
|
(5,024 |
) |
|
Depreciation and amortization |
|
|
92,679 |
|
|
|
87,741 |
|
|
General & administrative expenses |
|
|
18,842 |
|
|
|
18,328 |
|
|
Income tax provision |
|
|
38 |
|
|
|
75 |
|
|
Provision for impairment |
|
|
4,468 |
|
|
|
— |
|
|
Consolidated net operating income |
|
|
158,255 |
|
|
|
153,980 |
|
| Less: Net operating income of
non-same store properties and elimination of non-property specific
operations |
|
|
(19,185 |
) |
|
|
(19,309 |
) |
|
Same store net operating income |
|
$ |
139,070 |
|
|
$ |
134,671 |
|
Company / Investor Contact:Tom WirthEVP & CFO610-832-7434
tom.wirth@bdnreit.com
Brandywine Realty (NYSE:BDN)
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Brandywine Realty (NYSE:BDN)
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